'Doing business' climate improving--slowly: the only way for African economies to grow is by expanding the business base in each country; yet, some African countries seem to be doing their best to make it as difficult as possible to do business within their borders. However, as the IFC's recent Doing Business 2007 report shows, improvements are taking place in some countries.

Author:Siddiqi, Moin
Position:View from the City - International Finance Corporation

The World Bank expects regional growth in Africa to reach 9% a year within a decade, up from the 5.8% it should record in 2006. This will be reliant on current reforms being sustained. It is widely acknowledged that when international companies face barriers to doing business in Africa, it denies the continent much-needed FDI. Consequently a number of reform processes have been initiated and a recent IFC study shows they are having a positive impact on Africa's economies.



Doing business in resource-rich Africa, like any other developing regions, poses challenges and rewards. As Sir Mark Moody-Stuart, former chairman of AngloAmerican, says: "It is quite clear that only by growing business in general and creating a better investment climate for both large and small companies can we get the growth that is needed in Africa. Aid won't do it, but what we really need to do is nurture business.

"We know from our own experience and from investing in small businesses in our supply chain how many barriers there are to doing business here, with regulations, customs, general bureaucracy and so on."

That is the bad news. The good news is that Africa was the third-fastest reforming region in 2005/6, according to Doing Business 2007 a report published by the IFC, the private-sector arm of the World Bank that looks at how non-essential business barriers are being eliminated.

This study of 175 countries, 49 of them African, compares seven regions.

Between January 2005 and April 2006, 418 regulatory reforms were introduced, led by Eastern Europe & Central Asia (89); OECD-countries (83); sub-Saharan Africa (67); Middle East & North Africa (61); Latin America & Caribbean (58); East Asia & Pacific (35) and South Asia (25). By contrast, the Doing Business 2005 survey ranked SSA as 'the least reforming' region.

This year, however, two-thirds of African countries implemented at least one pro-business reform, with Ghana and Tanzania ranking among the top 10 reformers. Tanzania passed four reforms, Ghana, Morocco, Nigeria and Rwanda three reforms each, whilst Kenya, Lesotho, Mali, Mauritius and Niger all made two new reforms each.

These active reformers plus others--including Burkina Faso, Cote d'Ivoire, The Gambia, Mali, Senegal and Sudan--have simplified business formation and licensing, strengthened property rights and contract enforcement, reduced tax burdens and improved access to credit. The IFC notes: "More reforms...

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